Possible Scams with Wiring Money

Scammers come up with all kinds of convincing stories to get your money. And many of them involve you wiring money through companies like Western Union, MoneyGram, and your financial institution.

Why do scammers insist that people use money transfers? Because it’s like sending cash: the scammers get the money quickly, and you can’t get it back. Typically, there’s no way to reverse a transfer or trace the money, and money wired to another country can be picked up at multiple locations, so it’s just about impossible to identify or track someone down.

In some cases, agents of the money transfer company have been in on the fraud. In fact, the FTC found that between 2004 and 2008, agents of one wire transfer company helped fraudulent telemarketers and other con artists trick U.S. consumers into wiring more than $84 million within the United States and to Canada alone.

What You Need to Know

Money transfers can be useful when you want to send funds to someone you know and trust – but they’re incredibly risky when you’re dealing with a stranger. Remember:
 
Wiring money is like sending cash; once it’s sent, you can’t get it back. Con artists often insist that people wire money – especially overseas – because it’s nearly impossible to reverse the transfer or trace the money.

Never wire money to strangers or someone you haven’t met in person. That includes:

  • Sellers who insist on wire transfers for payment.
  • An online love interest who asks for money or a favor.
  • Someone advertising an apartment or vacation rental online.
  • A potential employer or someone who says it’s part of your new online job.
  • Someone who claims to be a relative or friend in dire straits – often in a foreign jail or hospital – and wants to keep it a secret from the family.

Never agree to deposit a check from someone you don’t know and then wire money back. The check will bounce, and you’ll owe your bank the money you withdrew. By law, banks must make the funds from deposited checks available within a reasonable period of time, but it can take weeks to uncover a fake check. It may seem that the check has cleared and that the money is in your account. But you’re responsible for the checks you deposit, so if a check turns out to be a fake, you owe the bank the money you withdrew.

Examples of Money Wiring Scams
Money wiring scams can involve dramatic or convincing stories. New scams, and variations of existing scams, are constantly being created. Here are some examples you may have heard about:

  • Lottery and Sweepstakes Scams: The letter says you just won a lottery. All you have to do is deposit the enclosed cashier’s check and wire money for “taxes” and “fees.” Regardless of how legitimate the check looks, it’s no good. When it bounces, you’ll be responsible for the money you sent.
  • Overpayment Scams: Someone answers the ad you placed to sell something and offers to use a cashier’s check, personal check or corporate check to pay for it. But at the last minute, the buyer (or a related third party) comes up with a reason to write the check for more than the purchase price, asking you to wire back the difference. The fake check might fool you, but it will eventually bounce, and you’ll have to cover it.
  • Relationship Scams: You meet someone on a dating site and things get serious. You send messages, talk on the phone, trade pictures, and even make marriage plans. Soon you find out he’s going to Nigeria or another country for work. Once he’s there, he needs your help: can you wire money to tide him over temporarily? The first transfer may be small, but it’s followed by requests for more – to help him get money the government owes him, to cover costs for a sudden illness or surgery for a son or daughter, to pay for a plane ticket back to the U.S. – always with the promise to pay you back. You might get documents or calls from lawyers as “proof.” But as real as the relationship seems, it’s a scam. You will have lost any money you wired, and the person you thought you knew so well will be gone with it.
  • Mystery Shopper Scams: You’re hired to be a mystery shopper and asked to evaluate the customer service of a money transfer company. You get a check to deposit in your bank account and instructions to withdraw the amount in cash and wire it – often to Canada or another country – using the service. When the counterfeit check is uncovered, you’re on the hook for the money.
  • Online Purchase Scams: You’re buying something online and the seller insists on a money transfer as the only form of payment that’s acceptable. Ask to use a credit card, an escrow service or another way to pay. If you pay by credit or charge card online, your transaction will be protected by the Fair Credit Billing Act. Insisting on a money transfer is a signal that you won’t get the item – or your money back.
  • Apartment Rental Scams: In your search for an apartment or vacation rental, you find a great prospect at a great price. It can be yours if you wire money – for an application fee, security deposit or the first month’s rent. Once you’ve wired the money, it’s gone, and you learn there is no rental. A scammer hijacked a real rental listing by changing the contact information and placing the altered ad on other sites. Or, she made up a listing for a place that isn’t for rent or doesn’t exist, using below-market rent to lure you in. If you’re the one doing the renting, watch out for the reverse: a potential renter will say she wants to cancel her deposit and ask you to wire the money back – before you realize the check was a fake.
  • Advance Fee Loans Scams: You see an ad or website – or get a call from a telemarketer – that guarantees a loan or a credit card regardless of your credit history. When you apply, you find out you have to pay a fee in advance. If you have to wire money for the promise of a loan or credit card, you’re dealing with a scam artist: there is no loan or credit card.
  • Family Emergency or Friend-in-Need Scams: You get a call or email out of the blue from someone claiming to be a family member or friend who says he needs you to wire cash to help him out of a jam – to fix a car, get out of jail or the hospital or leave a foreign country. But he doesn’t want you to tell anyone in the family. Unfortunately, it’s likely to be a scammer using a relative’s name. Check the story out with other people in your family. You also can ask the caller some questions about the family that a stranger couldn’t possibly answer.
  • Long-Lost Inheritance Scams: A lawyer contacts you to inform you that one of your long-lost relatives has died overseas, often but not always in Nigeria. The relative allegedly was an oil industry worker who died in a car crash or had a heart attack. The deceased relative, according to the lawyer’s message, has left a large amount of savings in a bank account which needs to be repatriated to the next-of-kin in the States. Apparently, all closely related family members are also deceased or untraceable – hence the unexpected contact with the long-lost relative. Since you are apparently the closest next-of-kin, you are entitled to take control of the one million or so US Dollars that the deceased has left. For you to obtain the financial windfall, you must first pay a money transfer fee of $200 and the lawyer’s fee of $500 to $1000. You will lose the money you send if you respond to this scam.
  • Online Job Scam: If you are looking for a job and you post your resume online, watch out for a phony job offer in which you are asked to act as a financial go-between and “process payments” or “transfer funds.” This scam begins with an e-mail that says a company is recruiting American citizens to process payments for employees or clients overseas. You will be instructed to deposit checks into your own bank account, take a small commission, and then wire the proceeds elsewhere, often overseas. The checks are later found to be counterfeit, so you will lose the money you wired.

For more information, go to the Federal Trade Commission’s (FTC) Money Matters website.